Tesla's next generation of lithium-ion batteries will reportedly go into mass production in 2023, with Panasonic making them.
With the new battery, Tesla's flagship Model S is expected to increase its range on a single charge by more than 15%, from 650 kilometers to about 750 kilometers, which is already one of the best electric vehicles can achieve.
The new battery is called 4680 battery due to its size specification of 46mm x 80mm. The 4680 battery is nearly twice as large and five times more powerful than Tesla's current battery. This reduces the number of batteries used per vehicle and battery installation time.
Panasonic has battery factories in Japan and the US. It is understood that Panasonic is planning to invest about $700 million to upgrade its plants in Japan and Wakayama Prefecture by introducing new equipment in order to massively increase battery production. The Wakayama plant is expected to produce 10 gigawatts (about 150,000 electric cars) a year, about 20% of Panasonic's total capacity.
To ensure the safety and efficiency of the technology, Panasonic plans to begin test production of the 4680 batteries at its Wakayama plant by March 2022, in preparation for final mass production in 2023.
Panasonic also said that the final delivery of batteries is not done by a single unit, and that it is difficult to quickly improve efficiency and accuracy without the coordination of every step from material development to commercial production.
In addition, Panasonic's 4680 batteries were made at Tesla's request, and the first batch will also be supplied to Tesla.
The 4680 battery was first publicly announced during Tesla's battery Day event in September 2020.
At the time, Tesla CEO Elon Musk said, "The 4680 battery will give Tesla electric vehicles five times more battery power, six times more power, and increase the range of Tesla vehicles by 16 percent."
Lower prices and higher range are two important factors that make electric cars popular.
In addition to increasing the range of electric vehicles, the production of the new battery is expected to significantly reduce the cost of manufacturing Tesla cars. A 14% reduction in cost per kilowatt-hour (batteries account for about 30% of the total cost of an electric vehicle).
In April 2021, Musk also mentioned that Tesla has a small 4680 battery pilot plant (with an annual capacity of 10 gigawatt hours). "We're not yet at the point where new batteries can be reliably put into cars, but we're close. Tesla has ordered equipment for battery production in Berlin and Austin. "The 4680 is expected to be approximately a year or no more than 18 months away from mass production."
During its October 2021 earnings call, Tesla said it expects to deliver the 4680 battery car in 2022.
Tesla, like most electric car companies, buys its batteries mainly from suppliers. But that has limited the speed with which cars can be produced. In 2018, for example, a battery shortage from Panasonic exacerbated Tesla's production woes, hindering the expansion of tesla's business.
To alleviate the battery shortage and reduce its reliance on outside suppliers, Tesla began planning to produce its own batteries, which it highlighted at battery Day 2020.
Ahead of the event, however, Musk tweeted that Tesla would not stop buying batteries from other companies. "We intend to increase, not decrease, battery purchases from Panasonic, LG Chem and Ningdeok." Musk also said Tesla hopes to work with existing suppliers to increase production of the 4680 battery.
As global demand for safer, cheaper and longer-lasting batteries intensifies, so does competition between electric car makers and battery makers. Mercedes-benz, for example, plans to start mass producing a model in 2022 that can travel 1,000 kilometers on a single charge. Ningde Times also announced a series of battery production and development plans, with a total investment of nearly $17.5 billion. LG Chem has raised about $8.8 billion through affiliates for battery research and development.
Panasonic and Tesla have worked together for more than a decade and also run the Gigafactory battery plant in Nevada. Panasonic once had a large share of the market for electric car batteries, thanks to strong customer demand for Tesla's vehicles. But in 2019, Panasonic lost market share as Ningde Times and LG Chem became Tesla's battery suppliers. The production of the new battery will also help Panasonic compete with other battery makers to regain its own market.
Finally, while the 4680 battery is mostly made for Tesla, Panasonic says it hasn't ruled out supplying it to other electric car makers. Panasonic is also aiming to make its new lithium-iron battery "the new global standard for electric vehicles".
In addition, Tesla is likely to provide further clarification on the 4680 battery during its upcoming earnings call.
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